The market cheered the news that unemployment fell in the three weeks leading up to the holidays, but with Christmas over, seasonal employment has taken a dive and augmented the number of people seeking unemployment benefits once again. The rise had been seen as an indication that corporations, no longer laying off employees, would begin hiring again. The realizpation that the number of people seeking unemployment benefits rose again last week; however, is sending mixed messages.
With weekly unemployment benefit applications adding 15,000 to a seasonally adjusted 381,000 some are adjusting their 2012 employment predictions toward the bearish. Others are looking to the four-week average, a less volatile indicator of unemployment for assurance that the market is stable. The average fell for its fourth consecutive week to 375,000, which could be interpreted as a more concrete signal that unemployment is beginning to decline.
The fact is; however, that employers have been reticent to add jobs when the economy remains in a state of flux. A curious assortment of indicators, for instance the fact that manufacturing in the U.S. rose last month, seem to directly contradict unemployment and underemployment data. More than ever, its difficult to assess the strength of the economy, especially as issues like potential European debt contagion and weak International economic growth numbers taint domestic strength.
For their part, many employers are able to get a smaller number of employees do more for less money. As a consequence of the protracted, two-and-a-half-year recovery, many are without jobs and those who have them are more willing to stay or take on added tasks without an increase in salary. The result is many employers hiring only if they absolutely must.
Simultaneously, highly skilled workers taking on positions for a lower salary is not just prevalent in the U.S. Outsourcing jobs may become increasingly common as companies recognize they can often get the most bang for their buck in terms of technology or customer service hiring if they look overseas. Even in the U.S. a rise in telecommuting makes outsourcing all the more sensible.
Around half of the jobs contributing to the recent gains were in the retail space but with the holidays over, there is no longer a need for the added employees. For the remainder of the year, it may be less important for employers to have their new hires physically present. The general trend toward telecommuting may continue alongside the rise in cloud programming and internet based positions. Additionally, the government has made expanding mass transit a priority beyond building new freeways in the face of higher populations, a decision that could lengthen commutes and promote more off-site work.
A recent piece published in The Atlantic seems to seems to feel the recent decline is indicative of a long-term trend, “To land a middle-income earning job, soft skills will rarely be enough. Technology literacy will ever more be required: ability to set up a video conference, be a SmartPhone power user, etc. And skills such as HTML-5 programming will more often be expected even for non-technical white-collar jobs.”
The piece goes onto illuminate how older Americans let go from high-level jobs in favor of younger people will be forced to take on lower wage positions. It also takes on the controversial perspective that the government’s goals to support the lower class is hindering job creation by taking the funds from the wealthy and major corporations responsible for much of the hiring.
The writer believes that hiring will continue to be abbreviated throughout 2012 with the exception of manufacturing, which has already seen an uptick as GE (GE) and a few other major corporations of this nature make a concerted effort to hire Americans.
A survey of 36 economists by the Associated Press this month seems to disagree about the weak assessments for hiring, stating that they anticipate the an average of about 175,000 jobs per month in 2012 based on reports from small businesses stating intentions to hire.
Another private sector survey included in a Time article said that more companies are planning to add workers in the first quarter of 2012 than they have since 2008.
Both of these hypotheses may be true. Companies may be hiring more workers this year, but they may not be American workers or highly skilled workers that would help to more effectively drive the economy to a full recovery.